Future bleak for business societies

Building societies have all but disappeared from the financial services scene and trends show that banks are merging their commercial banking and building society operations. Economic analyst, David Mupamhadzi, painted a grim picture for building societies.

“The future is very bleak due to lack of stable long term deposits,” he said. FBCH said the merger of FBC Bank and FBC Building Society would ensure compliance with the scheduled minimum capital requirements for June 2013.

Another economic analyst, Takunda Mugaga, said it was positive that banks would continue to offer building society services.

“Their absence will not stop banks from providing those services. However, due to the liquidity crisis, building societies cannot exist as stand-alone entities,” Mugaga said.

Financial institutions have been involved in negotiations to merge operations and consolidate resources to build banks that can withstand the current climate.

Commercial banks’ minimum capital requirements are pegged at $100 million while building societies’ new capital levels are at $80 million. Commercial banks were expected to reach the $50 million threshold by June 30, 2013.

Post published in: News

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